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  SHORT ANSWER 1.Alby Corporation purchased a warehouse by signing a long-term $800,000 mortgage with monthly payments of $6,200. The mortgage carries an interest rate of 9 percent. Prepare entries in journal form without explanations to record the purchase and the first two monthly payments. Round answers to the nearest dollar. General JournalPage.
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27.Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X). _____ 1. Clearing costs _____ 2. Driveway cost _____ 3. Computer installation cost _____ 4. Architect's fee for building plans _____ 5. Surveying costs _____ 6. Cost of assembly line trial.
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61.Lenz Corporation issued ten-year, 8 percent bonds payable in 2009 at a premium. During 2009, the company's accountant failed to amortize any of the bond premium. The omission of the premium amortization will a.cause net income for 2009 to be overstated. b.not affect net income reported for 2009. c.cause net income for 2009.
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41.Unamortized Bond Discount is a contra-liability account. 42.If the market interest rate at the date of issuance of a bond exceeds the face interest rate, the bond will probably be sold at a premium. 43.A bond agreement is referred to as the debenture. 44.An $80,000 bond issue priced at 97-3/4 is sold for.
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  1.A company with income before income taxes of $96,000, and $20,000 in interest expense, has an interest coverage ratio of a.5.8 times. b.4.8 times. c.3.8 times. d.6.8 times. 2.The advantages of financial leverage accrue primarily to a.management. b.stockholders. c.the government. d.creditors. 3.The debt to equity ratio is expressed in terms of a.a percentage. b.dollars. c.units. d.times. 4.Which of the following is an example of off-balance-sheet.
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TRUE/FALSE 1.The price/earnings (P/E) ratio is a measure of investors' confidence in a company's future. 2.The dividends yield is measured in terms of “times.” 3.Return on equity equals average stockholders' equity divided by net income. 4.The board of directors carries out the day-to-day operations of the business. 5.Stockholders elect the board of directors which appoints.
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13.On November 1, 2009, Fields Corporation issued $800,000 worth of ten-year, 9 percent bonds. The semi-annual interest dates are November 1 and May 1. Because the market interest rate of similar investments was 8.5 percent, the bonds were issued at a price of 103. Ignoring year-end accruals, prepare entries in.
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29.On January 1, 2009, Pung Manufacturing Company purchased for $94,000 a machine that will produce an estimated 75,000 units of Product X. The machine has an estimated useful life of five years and an estimated residual value of $4,000. Calculate the following amounts: (a) the carrying value of the machine.
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25.For each of the following descriptions, provide the name of the intangible asset that is being described. _______________ 1. Exclusive right to use a name or symbol _______________ 2. Exclusive right to sell photographic reproductions of a painting _______________ 3. Excess paid for a business over the fair market value of the net assets.
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28.McPherson Corporation has $1,000,000 of 20-year, 9 percent bonds dated October 1, with interest payment dates of September 30 and March 31. The company's fiscal year ends July 31, and it uses the effective interest method to amortize premium or discount. a. Prepare entries in journal form for November 1, March.
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71.When bonds are converted to common stock, which of the following could be part of the entry? a.Credit to Gain on Conversion of Bonds b.Credit to Unamortized Bond Premium c.Credit to Unamortized Bond Discount d.Debit to Common Stock 72.A company has $900,000 in bonds payable with an unamortized discount of $21,000. If two-thirds of the.
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32.On January 2, 2009, Vanowen Company purchased a machine for $80,000. The machine has an eight-year estimated useful life and an $8,000 estimated residual value. In addition, the company expects to use the machine 200,000 hours. Assuming that the machine was used 35,000 hours during 2010, complete the following chart..
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11.Under a defined contribution pension plan, a.the pension expense account must be determined by actuarial calculations. b.the employer guarantees the employee certain benefits upon retirement. c.accounting for annual pension expense is simple. d.the annual contribution is based on estimated future benefits. 12.Under an operating lease, the lessee a.debits Capital Lease Equipment. b.debits Rent Expense. c.records depreciation on the.
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51.Knollwood Corporation issued $281,000 of 30-year, 8 percent bonds at 106 on one of its semi-annual interest dates. The straight-line method of amortization is to be used. After 11 years, what is the carrying value of the bonds? a.$289,430 b.$289,992 c.$288,025 d.$291,678 52.The effective interest method of amortization of bond premiums and discounts is superior.
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19.Technically, what is meant by the amortization of a bond discount, and why is it necessary? 20.Tatum Corporation has $2,000,000 worth of 7 percent convertible bonds outstanding. On September 1, 20xx, there is $80,000 of unamortized discount associated with these bonds. The bonds are convertible at the rate of 30 shares.
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21.Leases of short-term assets are operating leases, and leases of long-term assets are capital leases. 22.A capital lease is a lease of property, plant, or equipment that is in effect an installment purchase. 23.Accounting for capital leases can be thought of as similar to accounting for mortgage payments. 24.When a monthly mortgage payment.
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25.Strathern Corporation issued ten-year term bonds dated January 1, 2009, with a face value of $800,000. The face interest rate is 10 percent, and interest is payable semi-annually on June 30 and December 31. The bonds were issued for $708,400 to yield an effective annual rate of 12 percent. Use.
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11.A corporation is a separate entity for legal purposes. 12.The liability of a stockholder is usually limited to the stockholder's investment in the corporation. 13.One disadvantage of a corporation is the lack of mutual agency. 14.The sale of shares in a corporation by one stockholder to another affects the total capital of the.
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11.On January 1, 20xx, Lurline Corporation issued ten-year, 8 percent bonds with a face value of $500,000. The semi-annual interest dates are June 30 and December 31. The bonds were issued for $437,740 to yield an effective annual rate of 10 percent. The accounting year ends on December 31. Prepare.
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31.The more debt securities a corporation issues, the greater the risk of default. 32.Bondholders are creditors of the issuing corporation. 33.Secured bonds are also known as debentures. 34.Unamortized Bond Premium is added to Bonds Payable on the balance sheet. 35.Face interest rate is another term for market interest rate. 36.If the face interest rate at.
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37.Starsky Manufacturing Company purchased three machines during the year: Feb. 10Machine 1$  1,800 July 26Machine 212,000 Oct. 11Machine 321,600 Each machine is expected to last six years and have no residual value. The company's fiscal year corresponds to the calendar year. Using the straight-line method, compute the depreciation charge for each machine for the.
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4.Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X). _____ 1. Parking lots _____ 2. Electricity used by equipment _____ 3. Sewage system cost _____ 4. Interest on building construction loan _____ 5. Cost of trial runs for equipment _____.
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11.The interest coverage ratio measures the degree of protection a company has from default on interest payments. 12.Failure to make interest payments on debt can force a company into bankruptcy. 13.When interest payments on an investment exceed the earnings from the investment, negative financial leverage has occurred. 14.It is illegal for a company.
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31.A bond with a face value of $10,000 has a current price quote of 102.62. The price in dollars and cents is a.$10,002.62. b.$10,200.62. c.$10,026.20. d.$10,262.00. 32.Serial bonds are bonds that a.mature on several different dates. b.all have the same maturity date. c.must be secured. d.are also called term bonds. 33.Term bonds are bonds that a.are also called serial bonds. b.may be.
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7.Indicate whether each of the following items normally would be considered a capital expenditure (C) or a revenue expenditure (R). _____ 1. Replacement of shake roof with tile roof _____ 2. Cost to replace light bulbs _____ 3. Window-cleaning costs _____ 4. Cost to rebuild company vehicle engine _____ 5. Cost to construct parking lot _____.
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  SHORT ANSWER 1.Indicate whether each of the following assets is subject to depreciation (D), depletion (DL), amortization (A), or none of these (X). _____1. Copyrights_____6. Trademark _____2. Patents_____7. Mineral deposit _____3. Oil well_____8. Office equipment _____4. Company vehicle_____9. Office supplies _____5. Land_____10. Leasehold improvement 1. A6. A 2. A7. DL 3. DL8. D 4. D9. X 5. X10. A 2.Grannis Corporation purchased.
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28.In the journal provided, prepare entries for the following independent transactions. (Omit explanations.) a. Purchased land and a building on the land for $960,000. The appraised values of the land and building are $350,000 and $650,000, respectively. b. Paid $5,000 for a sewage system, $15,000 for a parking lot, $1,000 to tear.
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101.A contract limiting the rights of others to go into business in a specific industry or line of business for a specified period is called a a.noncompete covenant. b.patent. c.copyright. d.trademark. 102.The federal government grants patents for a.10 years. b.20 years. c.40 years. d.the useful life of the patent. 103.The exclusive right to sell a computer program is covered by.
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11.Oren Company's air-conditioning system has just completed the eighth year of an estimated ten-year life. The system cost $60,000 and now has accumulated depreciation of $48,000. At the beginning of the ninth year, the company expects to spend $16,000 on a complete renovation of the system and expects the total.
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91.Which of the following items is not classified as a natural resource? a.Timberland b.A gas reserve c.An oil well d.Goodwill 92.Kotter Mining Company purchases a gravel pit for $2,500,000. It estimates that 5,000,000 tons of gravel can be extracted over the pit's useful life. If 930,000 tons are extracted and sold during the first year,.
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18.On November 1, 2008, Rob's Auto Repair purchased diagnostic equipment for $18,000. The equipment had an estimated residual value of $3,000 and a five-year life and was sold on May 1, 2010. Assuming that the company depreciates the asset on a straight-line basis and reports on a calendar-year basis, journalize.
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TRUE/FALSE 1.Financial leverage is also known as trading on the equity. 2.Dividends on stock are tax-deductible to the issuing corporation, whereas interest on debt is not. 3.The debt to equity ratio is a measure of financial leverage. 4.The interest coverage ratio is expressed as a percentage. 5.Bondholders share voting rights with stockholders. 6.A corporation's stockholders are.
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21.Interest coverage ratio is a measure of a.financial leverage. b.income after taxes and interest divided by interest expense. c.stockholders' control. d.protection from default on interest. 22.Bonds that mature in installments are called a.term bonds. b.debenture bonds. c.zero coupon bonds. d.serial bonds. 23.If the market interest rate is higher than the face interest rate at the date of issuance, bonds will a.not.
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81.An asset that cost $24,000 and has accumulated depreciation of $18,000 is sold for $5,200. The entry to record the sale is: a.Accumulated Depreciation— Asset   6,000 Asset      6,000 b.Cash   5,200 Accumulated Depreciation— Asset 18,000 Loss on Sale of Asset      800 Asset    24,000 c.Loss on Sale of Asset 18,800 Asset    18,800 d.Asset 18,000 Accumulated Depreciation—.
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15.Saticoy Corporation purchased a truck for $50,000. The company expected the truck to last five years or 100,000 miles, with an estimated residual value of $5,000 at the end of that time. During the second year, the truck was driven 23,000 miles. Compute the depreciation for the second year under.
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